Toronto resale home prices jump
‘Seasonal’ increase seen amid sharp drop in detached sales
The average Toronto area resale home price rose by about $43,000 or 6 per cent in September compared with August — a sign, say some realtors, that the slumped market is waking up, or at least levelling off.
“The increase in price is seasonal, but it’s still a positive sign because it tells you the market isn’t falling further,” said Realosophy president John Pasalis.
The average September home price of $775,546 was 2.6 per cent higher — about $20,000 more — than the same month last year. The number of resale home transactions was down, however, 35 per cent year over year, according to the Toronto Real Estate Board (TREB).
That’s due in large part to a 40-per-cent drop in the number of detached houses sold across the region, compared to a 27.5-per-cent decline in the number of resale condo transactions.
Condo prices remained a bright spot last month, averaging 20 per cent higher year over year, thanks to tight market conditions where lower entry-level prices for apartments continue to attract first-time buyers, according to TREB.
The number of new listings was down in Toronto but up across the region, leaving some areas, such as Richmond Hill, Aurora and East Gwillimbury, with an oversupply, Pasalis said.
“That’s one market that might see further downward pressure on prices, maybe less so on semis and towns, and things that are more affordable,” he said.
It has left sellers in those areas struggling to digest the change that has occurred in the Toronto region market since April, when the average home price peaked at $920,791, said Aurora-based Royal LePage broker Caroline Baile.
“Not only are the offers coming in below list price (and) the homes are taking longer to sell, but they are coming in with conditions, often on the sale of the purchaser’s home. That is a big change . . . ”
“We’re still getting sales, but they’re coming in at about 97 per cent of list price,” she said.
“It’s like we have two different markets. One in the core — downtown and the neighbourhoods that are in high demand and have low inventory — and then almost a completely different market for areas outside the city like York Region and Mississauga,” said Sohail Mansoor of Royal Lepage Signature Realty in Toronto.
Choice locations are still selling, often with multiple offers and, in some cases, agents are again holding off offers to a set date, something that was a given in the booming first four months of the year, he said.
“Five months ago, if a home backed onto a train track or hydro field, they received multiple offers. That wasn’t normal. We’ve gone back to that normal market where those homes have to be priced aggressively and they take a little longer to sell,” Mansoor said.
Real estate agents are watching closely the Office of the Superintendent of Financial Institutions (OSFI), he said.
The bank regulator is expected to initiate more rules to protect lenders and consumers from future interestrate hikes. The new guidelines will likely extend last year’s stress test to uninsured mortgage applicants with down payments of at least 20 per cent so they have to qualify for a loan at 2 per cent above the central bank rate.
Some agents say that banks typical- ly approve their clients for more than the consumers are willing to spend, Mansoor said. Although the new rules will decrease purchasing power, it won’t impact all home buyers.
While the OSFI changes are something the industry is watching, Jason Mercer, TREB’s director of market analysis, said there is good reason to believe buyers will step off the sidelines as they have in Vancouver, which introduced a foreign buyers tax last year, similar to the one that Ontario launched in April.
Toronto region employment is high and, despite two recent central bank rate increases, borrowing rates remain low.
“There ought to be still quite a bit of confidence in your ability to purchase and pay for a home over the long-term,” he said.
TREB market research suggests there are people who want to buy homes. “They’re just biding their time right now,” Mercer said.
Ontario Finance Minister Charles Sousa said the latest real estate data proves the government’s foreign buyers’ tax did not have an adverse effect.
“We were always concerned to the degree of an overcorrection that could have occurred and it didn’t,” Sousa told reporters at Queen’s Park.
“There’s sustainability in the marketplace, there’s now supply in the mix. Pricing of the housing has been maintained — in condominiums they’ve actually increased,” he said. His comments were echoed by Housing Minister Peter Milczyn, who pointed to price increases similar to inflation.